Friday, August 03, 2012

Facebook is not very popular among investors these days. Shares of the social media giant hit a new low of just $19.82 Thursday, nearly 50% below their initial offering price.

The stock has been under pressure since last week, when Facebook (FB) reported its first earnings as a public company, and failed to relieve investor worries about slowing sales growth and its plan for mobile advertising.

As Facebook's stock continues to bleed, institutional investors are beginning to unload their stakes. Fidelity Investments, which owns both public and private shares of Facebook, sold more than 1.9 million public shares in June across 21 different mutual funds, according to Morningstar data.

Of those 21 funds, 16 dumped more than 25% of their Facebook stakes, including the Fidelity Puritan fund (FPURX), which still owns 1.9 million shares. The Fidelity Disciplined Equity fund (FDEQX) sold almost 50% of its Facebook stock.

Of course, more than a dozen Fidelity funds also added shares of Facebook in June -- about 2.2 million shares combined -- including the Fidelity Contradfund (FCNTX), which boosted its stake by 264,000 shares, or almost 2%.

While Fidelity declined to comment on Facebook specifically, the firm's spokesman Stephen Austin said "portfolio managers make investment decisions every day for what they believe is in the best long-term interests of their funds' shareholders."

Meanwhile, a number of JPMorgan (JPM) mutual funds and a handful of funds managed by Turner Investment Partners sold significant parts of their stake in Facebook in June, according to Morningstar.

Facebook's stint as a public company has been rocky since day one, when a trading glitch at the Nasdaq (NDAQ) turned its public debut into a public fiasco.

Even prior to that botched first impression, investors and analysts alike have been questioning how the company will bring in more revenue from its 955 million users, particularly through its mobile platform which is becoming increasingly popular but lacks a strong advertising strategy.

Could it drop below $12.00?

ps: I think it could happen and when it happens, would you be interested in buying?

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comments:

HI Ze Moola,been reading your blog sometime and you must be resourceful man able to keep in going for some long time....despite some attack from a Samsong blogger...I experinece difficulty log into your blog,sometime momentary hang or page jerk..it was worse when there was an advert pop up some time ago...dont know why..(not internet line or computer..)this occur many time and at my desk top & note book...OK the main subject: would like to share what made you feel Facebook wd make US 12 ?? i am setting up to short via option..any insightful pointers?.Thk for sharing..warm regardbl

The IPO was a farce, from top to bottom. Most importantly, the valuation bias was based on earnings estimates which the FB ownself admitted that was far too optimistic. Destined to fail I was only surprised that it did not .reach these prices much earlier.

That said, what we are seeing mainly is just pure selling, selling which is based more on emotions. As such, valuations or fundamentals wouldn't matter much.

Could negative sentiments send the stock much lower? That's my guess, which is nothing but a guess. Yes, I could be wrong.

For what its worth, my believe, my guess is that below 12 bucks is a nice price to consider a purchase. I could be wrong. Stock could see a nice turnaround at 15. Or even at 20. Or maybe 10. See? I told it was a guess. :)

ok..thk for the intelligent guess...it could be irrational exuberance@40 or irrational despair@10...manage the risk and rest let it take care by itself...warm regardbl* btw-the google test word for filtering robot seem irrational as well..very tough reading :)